Correlation Between Iron Road and Siemens Energy
Can any of the company-specific risk be diversified away by investing in both Iron Road and Siemens Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Iron Road and Siemens Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road Limited and Siemens Energy AG, you can compare the effects of market volatilities on Iron Road and Siemens Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Iron Road with a short position of Siemens Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Siemens Energy.
Diversification Opportunities for Iron Road and Siemens Energy
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Iron and Siemens is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and Siemens Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Energy AG and Iron Road is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Iron Road Limited are associated (or correlated) with Siemens Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Energy AG has no effect on the direction of Iron Road i.e., Iron Road and Siemens Energy go up and down completely randomly.
Pair Corralation between Iron Road and Siemens Energy
Assuming the 90 days horizon Iron Road Limited is expected to under-perform the Siemens Energy. In addition to that, Iron Road is 2.8 times more volatile than Siemens Energy AG. It trades about -0.01 of its total potential returns per unit of risk. Siemens Energy AG is currently generating about 0.21 per unit of volatility. If you would invest 2,448 in Siemens Energy AG on September 25, 2024 and sell it today you would earn a total of 2,664 from holding Siemens Energy AG or generate 108.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Iron Road Limited vs. Siemens Energy AG
Performance |
| Timeline |
| Iron Road Limited |
| Siemens Energy AG |
Iron Road and Siemens Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Siemens Energy
The main advantage of trading using opposite Iron Road and Siemens Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Siemens Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Siemens Energy will offset losses from the drop in Siemens Energy's long position.| Iron Road vs. Nucor | Iron Road vs. ArcelorMittal SA | Iron Road vs. ArcelorMittal | Iron Road vs. Steel Dynamics |
| Siemens Energy vs. SIEMENS AG SP | Siemens Energy vs. Siemens Aktiengesellschaft | Siemens Energy vs. Siemens Aktiengesellschaft | Siemens Energy vs. Schneider Electric SE |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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